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On Behalf of | Jul 25, 2015 | Wang IP Law Blog

Today we introduce you to the cousin of the infamous patent troll, the copyright troll. Similar to the patent troll, copyright trolls are people or organizations that contract with multiple copyright holders in order to obtain the right to litigate on their behalf. These “trolls” then track down copyright infringers, or people who they suspect will violate their copyrighted material, and send out pre-litigation settlement letters in bulk. Copyright trolls make their money by threatening to sue for the maximum amount under the law, but ultimately offering a settlement deal for much less, usually ranging from $1,500.00 to $2,500.00. This way, recipients often opt to pay the fee and move on to avoid the high cost of litigation.

Why are they allowed to get away with this? For starters, the U.S. Constitution and the Copyright Act of 1976 allows a copyright holder to sue for infringement claims against anyone who violates their exclusive rights. 17 U.S.C. 501. The Copyright Act also gives copyright holders a choice to collect either actual damages or statutory damages should they prevail. 17 U.S.C. 501.

This has resulted in a favorable business opportunity for enterprising groups who view “trolling” as a chance to make a quick buck without ever having the intention of actually pursuing litigation. For example, Righthaven LLC was a company created just for this purpose. Righthaven contracted with individual copyright holders who lacked the resources to fully exploit their legal rights. Righthaven then proceeded to utilize their advanced resources that many original copyright holders lacked. Righthaven’s resources allowed them to easily target large groups of alleged copyright infringers. Instead of actually seeking to prevent copyright infringement by sending cease-and-desist letters to alleged infringers, Righthaven would immediately send out settlement letters in order to cash in on the likelihood of the recipient wanting to pay rather than risk a lawsuit and legal fees.

This scheme is referred to as a “litigate-prior to notice” tactic and it is now useless. The law now makes it clear that copyright trolls like Righthaven who only hold litigation rights cannot file infringement suits as a copyright holder per the Copyright Act. See Righthaven v. Democratic Underground, No. 11-16751 (9th Cir., May 9, 2013). While the copyright holder can sue anyone who violates his or her EXCLUSIVE rights, the court ruled that copyright trolls who have only obtained litigation rights but not exclusive rights do not meet the Copyright Act’s requirements to file an infringement suit.
As a result, copyright trolls have since begun to acquire exclusive rights to their holdings; however, this too may backfire on them. As seen in AF Holdings v. Does, copyright trolls who rely on “deceptive techniques” are liable under the Racketeer Influenced and Corrupt Organizations Act (RICO) statute. AF Holdings v. Does et al., Case No. 1:12-cv-00048 (D.C. Cir., May 27, 2014). Effectively, copyright trolls may face an uphill battle in trying to restore their original framework, even with exclusive rights.